# 6. C0 2 

## PRICE FORECASTS IN UTILITY IRPs A growing number of electric utilities include projections of the expected costs associated with greenhouse gas emissions in their resource planning . In addition to the pool of recent IRPs reviewed for this forecast, which a r e characte r ized below, Synapse has previously co n ducted an extensive study of resource plans dating back to 2003: • None of the 15 IRPs published from 2003-2007 that we reviewed included a C02 price forecast. • Of the 56 IRPs from 2008-2011 that we reviewe d, 23 included a C0 2 price forecast. This jump in the inclusion of carbon price projections in IRPs from 2008 onwards coincided with the introduction of the Waxman -Ma rkey bill in Congress, which sought to legislate a cap-and-trade system. As a result of th is bill, the inclusion of carbon pricing sensitivities in IRPs became paramount to prudent planning beginning in 2008; a majority of the IRPs in our 2015 review reflect an understanding that inclusion of a methodology to reflect future environmental regulations is prudent planning. • Of the 115 IRPs released in 2012 -2015 reviewed by Synapse (referred to below as our "current sample "), 66 include a C0 2 price in at least one scenario, including 61 with a C02 price in their reference case scenario (53 percent). • Moreover, of the 24 IRPs released in 2014-2015 reviewed by Synapse, 20 include a C0 2 price in at least one scenario, of which 19 include a C02 price in their reference case scenario (79 percent). These data show that the resource plans in the current sample includes a similar fraction of IRPs with a C02 price forecast as the 2008-2011 sample, when major climate bills were actively under consideration (57 percent in 2012-2015 as compared to SO percent in 2008-2011}. Table 2: IRP database summary statistics


### 2003-2007 15 0 

# -9 2008-2011 56 23 

### 2012-2015 115 66

2012 -2013 91 46 2014-2015 24 20 How well does our current sample represent utility planning across the United States? A total of 3,412 utilities operated in the United States in 2012. 47 1n terms of generation, the top 5 percent-170

47 EIA Form 860, 2012 (Released Oct. 10 , 2013)
. 

# II Synapse Energy Economics, I nc. 2015 Carbon Dioxide Price Forecast 25utilities - accounted for 77 percent of total U.S . generation in 2012. Our sample includes IRPs from 33 utilities within this largest 5 percent. Of those 33, 29 utilities have IRPs with non - zero 

### C0 2 prices. This means that almost all of the IRPs we reviewed from the largest utilities in the country include a non-zero 

### C02 pri ce in their planning process. Not all utilities produce IRPs . In fact, 11 states have no filing requirements for long-term planning, while 10 other states require long-term plans, but not IRPs . 48 While long-term planning is an important part of the procurement process in regions with wholesale energy markets, traditional utility-centric IRPs are less common . As a result, reg i ons with wholesale markets are not we ll represented in our sample. Figure 5 below displays non - zero reference case 

### C0 2 price forecasts from 46 utility IRPs over the period of 2014-2044. 49 Although we refer above to 61 non-zero 

### C02 price reference case fo recasts in the current sample , fifteen of these forecasts are excluded from this chart for various reasons. In some cases , our sample includes IRPs from companies i n 2012 

### and 2014 , i n which case we on ly include the most recent forecast. The remaining non -zero forecasts that are not included in the figure below are from companies that operate in multiple states but produce the same 

### C0 2 forecast, are confidential, or forecast a price that begins following the end of the IRP planning period .

48
49 See: Wil so n, R. a nd B. Bi ewal d . Best Pr a cti c es in Elect ric U tility I n tegrat ed R esourc e P lanning. June 1 , 20 13 . Syn apse En e rgy Econ o m i cs. Available at: http ://www.syn apse -ene rgy .com/Download s/SynapseRe po rt . 2013 -0 6 . R A P.Best- Practi ces- i n -I R P.13 - 038.pdf. We also provi d e a f igure showin g on ly forecasts produced in 2014 and 201 5 in Appe ndix A. These forecast s do not appe a r m at e rially diffe re n t than t h e ra nge of 2012 to 20 15 forecasts shown b el ow . 

# II Synapse Energy Economics, In c. 20 1 5 Carbon Dioxide Price Forecast 26Figure 5: Utility non-zero and non-confidential referen ce case forecasts from 2012-2015 50

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### "' 

## ... Cll Q.

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### o"' u $70 $60 $50 $40 $30 $20 $10 /

$- 

## ., 

# ., o./1 ID ...... CXl 

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## .... 

## .... .... 0 0 0 0 0 N N N N N 0"1 0 

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## .... N 0 N N m V o./1 ID ,..._ CXl 0"1 0 .... N m ., o./1 ID ,..._ CXl 0"1 0 ,...; N m v **NNNNNNNNtt")("f'\('f")Mfl1f"'")MMM('f") '¢~<e::t'd"'I:::T**  00000000000000000000000 NNNNNNNNNNNNNNNNNNNNNNN -NVNevada Power (2012} Mod-carbon case -WA Seattle Clty light (2 012} -NM/TX El P a1o Elec. (2012} -oR Portl and G&E (2 012 }

- CA PWP (20 12} 

### -Ole Publi c Service Co ofOK (2012} F leet Tramit l on : CSAPR -wA Tacoma Electric (2012}

-- I D Ida ho Power (2013) -IN Duke Energy Indiana (2013} -AK Alaska Energy Authority (2012} M edium -IN Indiana Munici pal Power Agency (2013} Refere nce

- wA Puget Sound Energy (20 13}8ase

- WA Grays Ha r bor PUD (2012}

-- MT NorthWestern Energy (201 3}

-- sc sceG (2012)8ase

- OK OG &E (2014} Reference MO Ameren MO (1014} Mod Case I N Vectre n (20 14} 1RP Base Case CT CT DEEP (2014} RGGI A2 Uni Source Energy (2014} WA Cowli tz PUD (20 1 4) Federal NC · SC Duke Energy Progress (2014 } Woth C02 lA Entcrgy lA Draft (2015} Reference case - uT PacifiCorp 2012 Base Case (S16 C02} (Dec 2011} -NM Southwestern PS (2012 } -oR Paciflcorp ( 2 013}8a1e -CA lADWP (2012} -WNOR Casca deNW (2012}

- WA Cowlin PUD (2012}

- NE NPPO (2013}

-- HI HECO (2013} -IN/MIIN·MI Power (2013} 

### -coColorado Springs Utili ties (2012) Low -MN-Wl Great River Energy (2012} M i d --WA Snohomish County PUD (2013} Base car bon Pri ce

-- NY ConEd (2012} RG GI

- LACLEC0(2013} NC/SC Duke Energy Ca roli nas (2014} Base NC/VA Domi nion 2014 Carbon (2014}

- VT Green Mountaon Power (2014}Lacapra RGGI F orecast A2 APS (2014) Base Case NM P NM (2014} Reference WA Benton PUO (2014} Federal lA SWEPCO (pre l i m } (20 15} Base A2 Tucson Electr o < Power (2014} KS Ka nsas City BPU ( 2014} Base C02

50 A number of non-zero, non-confidential reference case forecasts are exclu ded, discu ssed further on page 24. Synapse Energy Economics, Inc. 2015 Carbon Dioxide Price Forecast 27Four of the utility forecasts d isplayed in Figure 5 are particularly low in the context of the other forecasts . Two IRPs from the Northeast-Commonwealth Edison of New York and the Connecticut Department of Energy and Environmental Protection - base their refe rence case forecasts on RGGI prices before the recent RGGI revisions discussed in Sect ion 4, resulting in prices just und er $2 per short ton. Two other IRPs-P uget Sound Energy and Snohomish County PUD-us e a Washington State mandated C0 2price of $0.32 per short ton for their ba se case analyses. The five utili ties t h at assume a $0 C0 2 price in their reference cases also consider several additional non zero scenarios. Th ese are provided in Appendix A. 5 1 Table 3 summarizes the range of C0 2prices forecasted for 2020 and 2030. Not all forecasts start by 2020, and those that do are generally below $20 per ton. Of the utilities with a non - zero C0 2 price, all but four assume a pri ce in 2025. Table 3: Number of utility C0 2 Forecasts from 2012-2015 in several price ranges in 2020 and 2030 Compliance Year 

### 2020 2030 >$0- <$10 14 5 

### $10-$20 17 18 

### $20-$30 

### 6 11 

### $30 - $40 

### 2 2 

### >$40 

### 0 4 

# 7. OVERVIEW OF THE EVIDENCE FOR A FUTURE 

# C02 PRICE Our C0 2 price forecasts are developed based on the data sources and in formation presented above and reflect a reasonable ran ge of expectations regarding future efforts to limit greenhouse gas emissions. The following evidence has guided the development of the Synapse forecasts:
• Regulatory measures limiting C0 2 emissions fro m powe r plants 

### will be f ina lized in the near t erm. The EPA has proposed emissions stan dard s for new and existing power plants under Section 111(d) of the Clean Air Act, to be finalized by mid-summer 2015. These actions represent an effective price that will affect ut ilit y p la nning and operational decisions. • Environm ent al regulation can , and often does, evolve incrementally over ti me. Initia l awareness of environmental damages, followed successively by measurement and study

Sllndia napoli s Power & Light's " Environmental Case " C0 2 forecast is provided only as a trajecto ry with no va l ues on i t s axes, and is excl uded fro m Appendix A . 

# II Synapse Energy Economics, In c. 2015 Corban Dioxi de Price For ecast 28